COMMENT: Shortly before being dis­qual­i­fied as a can­di­date for the Egypt­ian pres­i­dency, Mus­lim Broth­er­hood lumi­nary Khairat el-Shater expressed intent to reject an emer­gency IMF loan to Egypt.

One con­sid­er­a­tion this brings to mind is what the result of that rejec­tion will be and what the Broth­er­hood seeks to gain from that gam­bit. It also makes us won­der what other Mus­lim Broth­er­hood (and “for­mer” Broth­er­hood) can­di­dates will do on this issue. Per­haps “Ter­rafractyl” can enlighten us on this point.

As noted in this col­umn, Egypt is in dire eco­nomic straits and, the obvi­ous warts and blem­ishes of the IMF aside, exac­er­bat­ing the grave eco­nomic plight of that soci­ety can not be good for the Egypt­ian people.

The author notes the Nazi her­itage of the Mus­lim Broth­er­hood and the­o­rizes that the Ikhwan’s exten­sive social ser­vices net­work will win the orga­ni­za­tion mas­sive and enthu­si­as­tic sup­port in the social mael­strom that fig­ures to result from an eco­nomic collapse.

In this regard, rejec­tion of the IMF loan may be seen against the back­ground of the effect of chan­cel­lor Bruening’s defla­tion­ary poli­cies (the “aus­ter­ity” embraced by Merkel, Rom­ney and oth­ers) on the Ger­man peo­ple. That aus­ter­ity was the engine that drove the Ger­man elec­torate into the arms of Hitler.

In our For The Record series about the “Mus­lim Broth­er­hood Spring”–FTR #‘s 733 through 739–we expressed the thought that, in the absence of any real progress on the eco­nomic front, the Ikwhan’s agenda would be “let ‘em eat Jews (Israelis).” One won­ders if eco­nomic col­lapse and result­ing social chaos will bring about that sort of phe­nom­e­non in Egypt

From the begin­ning, the pos­si­bil­ity of any real eco­nomic progress in a coun­try in which 56% of the women and 33% of the men are illit­er­ate seemed like a reach.

It seems like reject­ing the IMF loan will only make a bad sit­u­a­tion worse.

Egypt’s Mus­lim Broth­er­hood sig­naled its intent on Sun­day to push the coun­try into eco­nomic chaos. With liq­uid for­eign exchange reserves barely equal to two months’ imports and panic spread­ing through the Egypt­ian econ­omy, the Brotherhood’s pres­i­den­tial can­di­date Khairat al-Shater warned that it would block a US$3 bil­lion emer­gency loan from the Inter­na­tional Mon­e­tary Fund (IMF) unless the mil­i­tary gov­ern­ment ceded power.

“We told them [the gov­ern­ment], you have two choices. Either post­pone this issue of bor­row­ing and come up with any other way of deal­ing with it with­out our approval, or speed up the for­ma­tion of a gov­ern­ment,” Khairat al-Shater said in a Reuters inter­view. [1]

The news ser­vice added that al-Shater “said he real­ized the country’s finances were pre­car­i­ous and a severe crunch could come by early to mid-May as the end of the fis­cal year approached, but that this was the government’s prob­lem to resolve”.

Last week, Egypt’s cen­tral bank reported that total reserves had fallen to $15 bil­lion, but — more impor­tantly — liq­uid for­eign exchange reserves had fallen to only $9 bil­lion, equiv­a­lent to just two months’ imports. For­eign exchange futures mar­kets expect the Egypt­ian pound to lose half its value dur­ing the next year, and Egyp­tians have responded by hoard­ing diesel fuel, propane gas and other necessities.

With half of Egypt’s pop­u­la­tion liv­ing on $2 a day or less, the expected deval­u­a­tion would push a sig­nif­i­cant part of the pop­u­la­tion below min­i­mum nutri­tion lev­els, and bal­loon the government’s deficit as the cost of sub­si­diz­ing imported neces­si­ties rose. Egypt imports half its caloric consumption.

The IMF loan was a stop gap to delay deval­u­a­tion, but the Mus­lim Brotherhood’s al-Shater made clear that Egypt’s dom­i­nant polit­i­cal party would spike it. “It is not log­i­cal that I approve a loan that the tran­si­tional gov­ern­ment would take for two or three months, then demand that I, as a per­ma­nent gov­ern­ment, repay,” Shater told Reuters.” I have to agree to a loan, some­body else gets to spend it, then I have to pay it back? That is unjust.”

As Egypt headed towards chaotic break­down, West­ern observers asked how its econ­omy might be sta­bi­lized. This appears to have been the wrong ques­tion to begin with, for the Mus­lim Broth­er­hood will not allow the West to sta­bi­lize Egypt’s finan­cial posi­tion. The right ques­tion is: who will ben­e­fit from the chaos?

At this writ­ing, the Mus­lim Broth­er­hood appears to be the win­ner by default, for no other actor has the courage and cold blood to exploit the emerg­ing cri­sis. Amer­ica, by con­trast, is locked into the defense of a dete­ri­o­rat­ing fixed posi­tion. And Egypt’s mil­i­tary lead­ers are more con­cerned with feath­er­ing their nests in exile, like the Iran­ian gen­er­als in 1979.

The Broth­er­hood believes that wide­spread hunger will strengthen its polit­i­cal posi­tion, and is prob­a­bly cor­rect to believe this. As the cen­tral government’s cor­rupt and rick­ety sys­tem of sub­si­dies col­lapses, local Islamist orga­ni­za­tions will take con­trol of food dis­tri­b­u­tion and estab­lish a vir­tual dic­ta­tor­ship on the streets.

Amer­i­can ana­lysts mis­took the pro­tes­tors of Tahrir Square for rev­o­lu­tion­ar­ies. The Mus­lim Broth­er­hood now reveals itself to be a rev­o­lu­tion­ary orga­ni­za­tion on the Lenin­ist or Nazi model. . . .

. . . As a rev­o­lu­tion­ary orga­ni­za­tion that rose under the influ­ence of Nazi Germany’s wartime for­eign min­istry, the Broth­er­hood has no qualms about exac­er­bat­ing Egypt’s eco­nomic mis­ery if it fur­thers its agenda. Paul Berman’s 2010 book The Flight of the Intel­lec­tu­als sum­ma­rized exhaus­tive aca­d­e­mic research into wartime archives show­ing that the Broth­er­hood was shaped by Nazi ide­ol­ogy. Berman’s report evoked out­rage, but has stood up well to its crit­ics. [3] The New Repub­lic essay that formed the core of Berman’s book is available. . . .

Discussion

8 comments for “Egyptian Muslim Brotherhood Embraces Social Chaos”

I just fin­ished Paul Berman’s book. He is an excep­tion­ally fluid writer.
The his­tor­i­cal links between the Third Reich and the Mus­lim Broth­er­hood (par­tic­u­larly their com­bined pro­pa­ganda efforts) are syn­op­sized and recounted in very read­able lan­guage. He cogently argues for doubt regard­ing the MB and their legit­i­mate claim to any true moder­nity or Enlight­en­ment prin­ci­ples. And here, in this post, we see more evi­dence of the same.

A must read for all spi­firelis­ters. Thanks for the rec­om­men­da­tion, Dave.

One thing is becom­ing clear in Egypt’s IMF loan nego­ti­a­tion: Egypt’s abil­ity to finance its global imports is get­ting close to run­ning out and that’s prov­ing to be a tempt­ing polit­i­cal foot­ball. Egypt­ian tourism has col­lapsed in the last year and that was a huge source of for­eign cash on top of every­thing else that’s sent the country’s finances into tur­moil. With tourism implod­ing and cash run­ning out, the IMF loans are the main thing stand­ing between the Egypt­ian poor and hunger. That’s becuse Egypt is going be forced to do what non-eurozone coun­tries do when they run out of cash and have to keep pay­ing the bills: devalue their cur­rency (In the euro­zone, the coun­tries undergo “inter­nal deval­u­a­tion”). Egypt cur­rently arti­fi­cially props up their pound against the dol­lar, so if there is some sort of deval­u­a­tion that takes plans in the midst of panic it could be a rough one (there’s an esti­mate of a 50% drop of the egypt­ian pound against the dol­lar in one of the arti­cles below). And with with some­thing like half of Egypt’s pop­u­la­tion liv­ing on less than $2 a day, a cur­rency deval­u­a­tion on that scale risks an extreme social catastrophe.

It sounds like all par­ties involved agree that the IMF loan at hand for $3.2 bil­lion is going to have to hap­pen SOMEHOW for Egypt to avoid choas so it’s just a mat­ter of HOW the loan is works out and WHEN it hap­pens. And, it appears, WHO signs off on the deal and gets and WHO decide HOW the money is spent. The argu­ment that al-Shater was mak­ing (before his expul­sion from the race) was “since the loan money will be lent out now but the Mus­lim Broth­er­hood won’t come to power for sev­eral months, why should the MB-dominated assem­bly agree to a loan pack­age where the future MB gov­ern­ment has the lia­bil­i­ties to pay back the money but a the cur­rent army-run inter­min gov­ern­ment gets to decide how the money is spent”. So, accord­ing to al-Shater, unless an argree­ment is worked out with the army to allow the MB to assume power at an ear­lier date OR the terms of the loan is worked out so that the MB will have a greater say over how the bil­lions are spent, the MB is going to use its votes in the assem­bly to block the eco­nomic pack­age. As the arti­cle below points out, these were demands that almost cer­tainly wouldn’t be met, and if there’s a dis­or­derly deval­u­a­tion (say, from con­flict­ing erupt­ing in the Mid­dle East before the aid pack­age is final­ized), the poten­tial for polit­i­cal chaos and vio­lence is real. So this is one hell of a game of chicken the MB has been play­ing:

(Reuters) — In all but rul­ing out an early agree­ment on an IMF loan, Egypt’s Mus­lim Broth­er­hood has dra­mat­i­cally raised the stakes in its strug­gle with the army-led admin­is­tra­tion for con­trol of a coun­try still reel­ing from a year of polit­i­cal turmoil.

The Brotherhood’s can­di­date for pres­i­dent, Khairat al-Shater, said this week the group would not accept an Inter­na­tional Mon­e­tary Fund loan unless its terms were changed or a new gov­ern­ment was formed to mon­i­tor how it is spent, demands that almost cer­tainly won’t be met.

Even with­out a loan before the pres­i­den­tial elec­tion in May and June, who­ever comes to power will be forced, sooner or later, to impose hugely unpop­u­lar taxes and cuts in gov­ern­ment spend­ing to reduce bud­get and bal­ance of pay­ments deficits inflated by a year of polit­i­cal and eco­nomic turmoil.

But any delay in secur­ing a loan brings closer the prospect of a fully fledged fis­cal cri­sis that would mean a jump in con­sumer prices and inter­est rates, a sharp deval­u­a­tion and huge pres­sure on banks.

It’s a game of brinkman­ship in which the Broth­er­hood might be first to yield to avoid inher­it­ing an econ­omy in tat­ters, fear­ing it will end up tak­ing the blame for painful mea­sures that the cur­rent gov­ern­ment has repeat­edly delayed.

The country’s tran­si­tion to civil­ian rule will cul­mi­nate at the end of June, when the mil­i­tary hands power to a newly elected pres­i­dent for whom the econ­omy will be a top priority.

...

Bar­ring shocks, the coun­try should have a big enough finan­cial cush­ion to see it through for at least three months, until an elected gov­ern­ment is installed with a pop­u­lar man­date to push through an IMF agreement.

The IMF, how­ever, has demanded broad polit­i­cal sup­port before it signs any agree­ment, in par­tic­u­lar from the Mus­lim Broth­er­hood, whose Free­dom and Jus­tice Party won nearly half the seats in the new parliament.

Shater said he was not opposed to a deal in prin­ci­ple, but only to the plan to dis­burse part of it while the army-backed tran­si­tional gov­ern­ment remained in power.

He said the Broth­er­hood might accept an IMF deal if the loan’s first install­ment was reduced to $500 mil­lion from the cur­rent plan of pay­ing out more than $1 bil­lion imme­di­ately upon signing.

DECLINING FOREIGN RESERVES

Econ­o­mists say the cen­tral bank still has enough for­eign reserves to hold on well past the pres­i­den­tial elec­tion with­out hav­ing to devalue the pound.

“Cap­i­tal flight has already taken place, and that’s going to leave the cen­tral bank hav­ing to cover a short­fall of around $600–750 mil­lion a month from here on,” said Williams, who esti­mated the gov­ern­ment could hold out for another six months.

But other econ­o­mists warn that an out­break of polit­i­cal vio­lence could pro­voke cap­i­tal flight and dis­rupt tourism, which has yet to recover since last year’s upris­ing. Sim­i­larly, a spike in oil prices could drive up the cost of imported fuel.

...

Any result­ing drain on dol­lars could exhaust the abil­ity of the cen­tral bank to defend the pound, which it has allowed to weaken by only 3.5 per­cent against the U.S. dol­lar since the uprising.

“Fail­ure to secure help from the IMF would make a dis­or­derly deval­u­a­tion more likely. In this sce­nario, the pound could over­shoot, falling by per­haps 50 per­cent or more against the U.S. dol­lar,” Said Hirsh of Cap­i­tal Eco­nom­ics wrote in an April 5 research note.

“The costs to the econ­omy would be severe. This is likely to lead to a spike in infla­tion, sharp hikes in inter­est rates, a poten­tial bank­ing cri­sis and rapid fall in asset prices.”

...

So this next 3–6 months is going to be an espe­cially vul­ner­a­ble period for Egypt because that finan­cial cush­ion that it had last year, when the rev­o­lu­tion was just begin­ning, is now almost offi­cially out. It’s also likely to be a period of end­less IMF-dictates for austerity...and period when Egypt­ian nation­al­ism is allowed to man­i­fest itself for the first time in decades. AND, as the arti­cle above indi­cates, every­one agrees that, sooner or later, Egypt is going to imple­ment a series of painful tax hikes and spend­ing cuts. So the MB has to know that it’s the only polit­i­cal group that will be forced to imple­ment and “own” what­ever future reforms pop up. Unless, of course, things get really bad. So bad that econ­omy the falls apart in a way that doesn’t leave the MB as the default cul­prit. It’s the “things get really bad for Egypt, but good for the MB” sce­nario that’s look­ing like the scari­est pos­si­bil­ity right now, so any fur­ther indi­ca­tion that the MB is intent on foment­ing an out of con­trol sit­u­a­tion is some­thing to watch for between now and when­ever the inevitable “reforms” get offi­cially passed. The more chaotic the sit­u­a­tion when those reforms get passed, the bet­ter the sit­u­a­tion for the MB.

As this arti­cle from yes­ter­day indi­cates, there’s been pretty much no progress on the loan issue even after the MB was handed the pres­i­dency by the ejec­tion of the can­di­dates. Yeah, al-Shater was ejected too, but his replace­ment, Muhammed Mursi, should over­whelm the com­pe­ti­tion now that the other Islamist can­di­dates are out too and can’t split the Islamist vote. So the MB knows unam­bigously that they’ll be hold­ing the reigns of power in a few months. They also know that the IMF will be push­ing for aus­ter­ity mad­ness eco­nomic reforms that could be excep­tion­ally painful for the Egypt­ian peo­ple. So we all know that some­how this sit­u­a­tion is going to have to change:

Cairo reap­plies for IMF debt-aid

Pub­lished May 6th, 2012 — 10:49 GMT via SyndiGate.info

...

A series of blows to a final agree­ment with the IMF have raised fresh con­cerns about whether Egypt can sus­tain its fis­cal sit­u­a­tion much longer. Last month, the par­lia­ment rejected the government’s new eco­nomic plan, the key to the country’s request for the $3.2bn loan. Only six of 365 mem­bers of the assem­bly, which is dom­i­nated by the pow­er­ful Mus­lim Broth­er­hood, voted in favour of the plan.

The IMF has said repeat­edly in recent weeks that it will back only a recov­ery plan that has “broad polit­i­cal sup­port”, mean­ing that to grant the loan it needs the approval of the Mus­lim Brotherhood’s Free­dom and Jus­tice Party, the major­ity polit­i­cal party in par­lia­ment. A mem­ber of the party is one of three front run­ners in the upcom­ing pres­i­den­tial election.

Egypt’s inter­na­tional reserves have fallen to a dan­ger­ously low level, about $15.1bn at the end of March, and the cur­rent account deficit widened to $8bn in the six months to the end of December.

Now, in the midst of a polit­i­cal upris­ing that shows no signs of wan­ing, var­i­ous parts of the Egypt­ian gov­ern­ment are being forced to reassess decades-long spend­ing pat­terns that have dri­ven the country’s bud­get deficit higher.

...

Reforms are key to boost­ing the nation’s eco­nomic prospects but are also impor­tant for help­ing the interim gov­ern­ment and polit­i­cal forces gain wider accep­tance from for­eign investors and poten­tial donors as a messy tran­si­tion is under way.

But econ­o­mists say that with­out agree­ment on the IMF loan, the Egypt­ian pound will fall as much as 15 per cent over the next few months and the absence of an IMF loan would leave the nation with lit­tle exter­nal financing.

Saudi Ara­bia has been the only coun­try since last year not to wait for the IMF deal to start dis­burs­ing loans. The king­dom has so far given Egypt $500m out of almost $4bn of aid pledged after last year’s pop­u­lar revolt that drove Hosni Mubarak from the pres­i­dency. But recent ten­sions between the two coun­tries now threaten the flow of Saudi aid.

That last para­graph about the recent Egypt­ian strains with Israel and Saudi Ara­bia is par­tic­u­larly inter­est­ing. Other than the US these are per­haps the two most expen­sive coun­tries Egypt could have strains with even dur­ing eco­nomic good times. But as the above arti­cle points out, the Saudis are the one gov­ern­ment con­tin­ing mak­ing loans to Egypt in spite of the IMF halt. $4 bil­lion dol­lars, even more than the entire IMF loan. So this is a par­tic­u­larly high-risk pair of tiffs for the Egypt­ian gov­ern­ment to pe engaged in dur­ing a time like this and it’s notable that the MB is lead­ing that pop­u­lar anti-Saudi/Israeli back­lashes:

Egyp­tians are angry, say Arab com­men­ta­tors, and it’s not just because of unem­ploy­ment, dete­ri­o­rat­ing secu­rity or the con­tin­ued de-facto rule of the military.

Their ire is also very much con­nected to for­eign pol­icy, and specif­i­cally to the ties with two coun­tries that have loomed so large in Egypt’s mod­ern his­tory: Israel and Saudi Arabia.

Both states took a beat­ing in the Egypt­ian media this past week: Israel, over a con­tro­ver­sial gas deal with Egypt that has been sus­pended, and Saudi Ara­bia over its arrest of a promi­nent Egypt­ian human-rights cam­paigner who was per­form­ing a reli­gious pilgrimage.

In each case, Egypt­ian gen­er­als and their unelected allies in gov­ern­ment have been forced to try to tame the con­flicts, which are being fueled by a wide pop­u­lar move­ment — strongly backed by elected polit­i­cal par­ties includ­ing the Mus­lim Broth­er­hood — to reassert Egypt’s dig­nity and pres­tige in the region.

The annul­ment of the con­tract leads to “the achieve­ment of a def­i­nite pop­u­lar wish to stop the expor­ta­tion of gas to the Zion­ist entity,” wrote the colum­nist Wagdi Zeined­din in Al-Wafd, the Cairo-based news­pa­per of the lib­eral Al-Wafd party.

The deal to deliver Egypt­ian nat­ural gas to the Israel Elec­tric Corp. was signed in 2008 under ousted Pres­i­dent Hosni Mubarak and accounts for 40 per­cent of Israel’s annual natural-gas usage.

...

Equally delighted by the Egypt­ian deci­sion, the Jerusalem-based Al-Quds wrote in an edi­to­r­ial that it sig­nals changes that go well “beyond gas.”

“The issue has another aspect, deeply related to pol­i­tics in light of the rad­i­cal change tak­ing place in Egypt since the fall of Mubarak and his regime,” it wrote.

Even though the armed forces coun­cil is keen to “calm its for­eign fronts until the sit­u­a­tion is sta­bi­lized at home,” sooner or later “change will come, and Egyptian-Israeli rela­tions will no longer be as calm they used to be in the days of Mubarak.”

This could have pos­i­tive con­se­quences for the Pales­tin­ian strug­gle, the paper said, as Israel will want to end its occu­pa­tion of Pales­tin­ian lands sooner to avoid pro­vok­ing the wrath of the grow­ing “rev­o­lu­tion­ary forces and Islamic trends” in sur­round­ing states.

...

This past week, how­ever, there were rau­cous protests out­side the Saudi Embassy in Cairo — it was even­tu­ally closed and the ambas­sador was with­drawn — which was accom­pa­nied by a graf­fiti and social-media cam­paign dis­parag­ing the Saudi king directly. Pun­dits chimed in to say they are fed up with how the Saudis treat Egypt­ian work­ers and how they treat Egyp­tians in Egypt.

The cause of the indig­na­tion was the arrest of the Egypt­ian lawyer Ahmed el-Gizawi upon his arrival in Saudi Ara­bia on April 17. The Saudi author­i­ties even­tu­ally claimed Gizawi had been found with more than 20,000 Xanax pills hid­den in his lug­gage, a grave offense.

(Reuters) — Saudi Ara­bia frets that Egypt, its strongest Arab ally and a major recip­i­ent of Saudi fund­ing, is falling under what it sees as the bale­ful influ­ence of the Mus­lim Brotherhood.

Riyadh recalled its ambas­sador from Cairo at the week­end in a spat that under­lines the mis­giv­ings of the robed princes who rule the world’s top oil exporter and who have watched Egypt’s rev­o­lu­tion and its often chaotic after­math with alarm.

They fear that polit­i­cal uncer­tainty in Egypt, which votes in a pres­i­den­tial elec­tion this month, may under­mine a decades-old strate­gic bond between the two pro-U.S. Arab allies, a bond already shaken when Egyp­tians top­pled their ruler last year.

“The Saudis viewed the ouster of (Pres­i­dent) Hosni Mubarak as a very neg­a­tive devel­op­ment,” said Robert Jor­dan, the U.S. ambas­sador in Riyadh from 2001-03.

“They’re con­cerned about the Mus­lim Broth­er­hood and the uncer­tainty of the lead­er­ship. And they’re very sen­si­tive at any hint that that move­ment could spread to Saudi or other Gulf countries.”

Riyadh’s recall for con­sul­ta­tions of Ambas­sador Ahmed Kat­tan after protests out­side the Saudi embassy against the arrest of an Egypt­ian lawyer in the king­dom may prove fleeting.

Egypt seems keen to have Kat­tan back, judg­ing by gov­ern­ment state­ments and reports in state-owned news­pa­pers of Egyp­tians wav­ing Saudi flags at the embassy call­ing for his return.

It was street protests out­side the Saudi embassy last week that caused umbrage in Riyadh. Crowds were protest­ing at the arrest of Egypt­ian lawyer Ahmed El-Gezawi by Saudi authorities.

Egypt­ian activists said he had been detained for speak­ing out against ill-treatment of Egyp­tians in the king­dom. The Saudi author­i­ties said he had been smug­gling drugs.

Even if the diplo­matic quar­rel is smoothed over, it reflects the new fragility of a once-solid alliance between the most pop­u­lous Arab nation and the richest.

Saudi Ara­bia last month agreed to grant Cairo $2.7 bil­lion in aid — and has given no pub­lic sign so far of recon­sid­er­ing this pledge — but it fears Egypt’s polit­i­cal evo­lu­tion will amplify the Brotherhood’s regional clout while dimin­ish­ing Saudi influ­ence, said an Egypt­ian offi­cial who asked not to be named.

The Broth­er­hood and Saudi Ara­bia share Sunni Mus­lim val­ues, but Riyadh regards the move­ment as an ide­o­log­i­cal com­peti­tor with an aggres­sively activist polit­i­cal doc­trine that might desta­bi­lize allies and foment dis­cord inside the kingdom.

“With­draw­ing the ambas­sador was a way of remind­ing Egyp­tians that Saudi secu­rity con­cerns have to be respected,” said Shadi Hamid, direc­tor of research at the Brook­ings Doha Center.

“The Broth­er­hood hasn’t really gone out of its way to reas­sure Saudi Ara­bia about regional secu­rity interests.”

...

“If Egypt can’t sus­tain its finan­cial sys­tem there could be a power vac­uum and the sort of sit­u­a­tion that al Qaeda might exploit. The Saudis have an inter­est in main­tain­ing the via­bil­ity of Egypt’s econ­omy,” said Jordan.

For its part, the Mus­lim Broth­er­hood knows Egypt has no cred­i­ble donors that could sub­sti­tute for Saudi Ara­bia, said Daniel Kurtzer, U.S. ambas­sador to Egypt from 1997–2001.

“I don’t think the lead­er­ship of any of the Egypt­ian fac­tions — the mil­i­tary, civil soci­ety, the Islamists — would want to change things. The prob­lem is where the street takes Egypt­ian pol­icy,” he said.

“It’s wait­ing for Egypt to set­tle and for a lead­er­ship to emerge before we start rebuild­ing the strate­gic alliance we have with them,” he said.

So, to sum­ma­rize, we have a sit­u­a­tion where Egypt is rapidly run­ning out of its cur­rency reserves — reserves it needs to buy grain on the inter­na­tional mar­kets just to feed itself — and all this is hap­pen­ing right at a time when the MB and mil­i­tary are locked in an uneasy power strug­gle. That power strug­gle, in turn, appears to now include the gov­ern­ment approval of an IMF loan pack­age that is required to avoid com­plete choas in a few months after the cur­rency reserves run out. AND not only is this IMF loan pack­age tus­sle a fight over who gets to dis­burse the bil­lions in loans (a fight for the polit­i­cal spoils) but it’s also appar­ently a fight over who gets blamed for the inevitable tax hikes and spend­ing cuts that the next gov­ern­ment is going to HAVE to pass in order to please the IMF(because the loan comes with stings attached). The IMF is demand­ing that Egypt’s gov­ern­ment pro­vides broad sup­port for the loan pack­age and that means the MB HAS to approve of the deal. But so far the MB appears to be unin­ter­ested in approv­ing the loan pack­age unless the mil­i­tary hands over com­plete power in advance or changes the loan terms to give the MB greater con­trol of the spoils. And, to top it all off, the MB is lead­ing the polit­i­cal charges against two of Egypt’s biggest trad­ing part­ners, one that could cre­ate a major mil­i­tary headache and the other that effic­tivly bank­rupt the coun­try overnight. It does indeed look like the MB is bet­ting on chaos.

@Pterrafractyl: Great research. One thing is cer­tain. When the coun­try will col­lapse, we can be sure it will, there will be chaos. Peo­ple will turn to each other to blame and you can be sure Chris­tians and Jews will be slaugh­tered to the last ones. It’s already started though­out North Africa and the Mid­dle East.

On another mat­ter, the fact that there is an anger shift from Mubarak and his regime toward Israel and Saudi Ara­bia could mean an Iran­ian influ­ence. The reports I get from some Jew­ish friends is that Iran would bomb Israel and Saudi Ara­bia if they were to have a nuclear bomb and make the deci­sion to act. This sud­den shift in anger sug­gests that Iran may be involved in the devel­op­ment of the polit­i­cal sit­u­a­tion on the ground, for the so-called Arab Spring there.

@Claude: Not so sure about Saudi, TBH. After all, they too, are under the con­trol of rad­i­cal Islamist fas­cists just like Iran. And per­haps the Iran­ian gov’t may indeed be assist­ing with the hijack­ing of the Arab Spring movement.....only time will tell, I guess.

CAIRO (Reuters) — Egypt’s Mus­lim Broth­er­hood orga­nized a 760-km (470-mile)-long human chain of sup­port­ers across the coun­try on Thurs­day to back the group’s pres­i­den­tial can­di­date Mohamed Mursi in a show of strength ahead of next week’s his­toric vote.

From Cairo to Aswan, mem­bers of the Broth­er­hood and its Free­dom and Jus­tice Party (FJP), held posters of Mohamed Mursi, the Brotherhood’s alter­na­tive choice to the group’s ini­tial can­di­date Khairat Shater, who was dis­qual­i­fied over a mil­i­tary court conviction.

On July 22, debkafile revealed that a group of six Mus­lim Broth­er­hood offi­cials escaped from Egypt after the July 3 over­throw of pres­i­dent Mohamed Morsi in a mil­i­tary coup and smug­gled them­selves into the Gaza Strip to lead an upris­ing against the mil­i­tary. The group was headed by Mah­mud Izzat Ibrahim, known as the Brotherhood’s “iron man” and fourth in rank in its hier­ar­chy after Supreme Guide Muhammed Badie.

The fugi­tives set up a com­mand post at the Gaza Beach Hotel for oper­a­tions against Egypt­ian mil­i­tary and secu­rity tar­gets in col­lab­o­ra­tion with Hamas and armed Al Qaeda-linked Salafist Bedouin in Sinai. The group planned their revolt to spread quickly out from Sinai to Egypt proper and top­ple the interim rulers in Cairo.
West­ern intel­li­gence agen­cies fol­low­ing the inner work­ings of the Mus­lim Broth­er­hood have since dis­cov­ered that the Brotherhood’s plans are a good deal more high-powered than first thought.

Accord­ing to debkafile’s intel­li­gence sources, the move­ment never dis­man­tled its clan­des­tine para­mil­i­tary under­ground. Its hid­den com­man­ders manip­u­lated front politi­cians from the shad­ows under three Egypt­ian pres­i­dents and con­tin­ued to do so after the Broth­er­hood was elected to power in Cairo in 2012.
At all times since then, the Broth­ers stood ready to step in should their Free­dom and Jus­tice Party lead­ers be ousted and sent back to prison. “Supreme Guide,” Mohammed Badie was there­fore no more than an obe­di­ent front for the Mus­lim Brotherhood’s real leader, who was until now Mr. X.
It now tran­spires that he is none other than Mah­moud Izzat Ibrahim, who is firmly at the helm and run­ning the show both in Sinai and Cairo from the Gaza Beach Hotel, under the aus­pices of the Pales­tin­ian Hamas rulers.
He plans to con­front with vio­lence every action ordered against the Broth­er­hood by Defense Min­is­ter, Gen. Abdel-Fattah El-Sisi.

While con­duct­ing a war of ter­ror against mil­i­tary tar­gets in Sinai, Izzat Ibrahim’s orders keep thou­sands of fol­low­ers main­tain­ing their sit-in protests in Cairo for their president’s rein­state­ment. They are deter­mined to leave the mil­i­tary no option but to use force to dis­perse them.
Ibrahim’s goal is to lead his move­ment into a bloody con­fronta­tion with the mil­i­tary.
Gen. El-Sisi, for his part, knows that the Brotherhood’s under­ground com­mand cen­ter in the Gaza Beach Hotel must be destroyed in order to beat its war of resistance.

For effec­tive action in the Gaza Strip, the Egypt­ian mil­i­tary needs help from Israel’s Defense Forces, just as the IDF needs the Egypt­ian army to coun­ter­act the al Qaeda and other Islamic ter­ror­ists in Sinai who are ded­i­cated to attack­ing Israel as well as Egypt.

This tacit inter­de­pen­dence and the inter­changes against a shared enemy shot into promi­nence over two inci­dents. The first was the two-hour clo­sure Thurs­day, Aug. 8 of Eilat air­port at Israel’s south­ern­most tip, fol­low­ing an Egypt­ian intel­li­gence tip-off over a mis­sile threat from Sinai. Then Fri­day, Aug. 9, for­eign sources reported that two mis­siles fired by an Israeli drone in North Sinai destroyed a mis­sile launcher and killed four or five ter­ror­ists at Ajarah.
Israel never con­firmed this attack. The impres­sion it made was quickly over­laid with con­flict­ing reports. Egypt­ian offi­cials ini­tially attrib­uted the Israeli drone attack to intel­li­gence coop­er­a­tion between the two armies. An Al-Qaeda group in Sinai, Ansar Beit al-Maqdis, accused Israel of killing four of its mem­bers by a drone strike and vowed vengeance. debkafile reported that the attack may not have been con­ducted by Israel but Egypt­ian author­i­ties, which pre­ferred to dis­avow an oper­a­tion car­ried out on the Mus­lim fes­ti­val of Eid al-Fitr.
Finally, Sun­day, the Egypt­ian mil­i­tary reported that its oper­a­tion against armed groups in the Sinai believed to have been plot­ting attacks on secu­rity forces and other tar­gets was ongo­ing. At least seven peo­ple were killed over night and six arrested in a raid.
The Egypt­ian mil­i­tary state­ment went on to report that the raid fol­lowed an air strike by the Egypt­ian mil­i­tary on Fri­day, which saw at least four peo­ple killed. The assault on Sat­ur­day hap­pened when Apache heli­copters hit areas south of Sheikh Zuwaid in north Sinai, accord­ing to Egypt­ian state media.

Israel’s Defense min­is­ter com­mented: “The Egypt­ian army is fight­ing first and fore­most to defend Egypt­ian cit­i­zens and sov­er­eignty. We will not let rumors and spec­u­la­tion impair the peace rela­tions between our countries.”